72 MONOPOLY CAPITAL
profit margins in turn imply aggregate profits which rise not
only absolutely but as a share of national product. If we provi-
sionally equate aggregate profits with society's economic sur-
plus, we can formulate as a law of monopoly capitalism that
the surplus tends to rise both absolutely and relatively as the
system develops. 22
This law immediately invites comparison, as it should, with
the classical-Marxian law of the falling tendency of the rate of
profit. Without entering into an analysis of the different ver-
sions of the latte1·, we can say that they all presuppose a com-
petitive system. By substituting the law of rising surplus for
the law of failing profit, we are therefore not rejecting or revis-
ing a time-honored theorem of political economy: we are
simply taking account of the undoubted fact that the structure
o~ the capitalist economy has undergone a fundamental change
since that theorem was formulated. What is most essential
about the structural change from competitive to monopoly cap-
italism finds its theoretical expression in this substitution.
But before we explo1·e the implications of the law of rising
surplus, we must examine, even if only briefly, some of the
arguments which have been or might be used to deny that such
a tendency exists.
AT&T's efficiency and surging growth is the fact that rate decreases
rather than incre~ses are i.ts p~ese?t problem. Generally the company no
longer asks for higher tariffs; it simply wants the commission [the Fed-
eral Communications Commission] to let nature take its course and
permit the rate o~ return t~ rise. In oth~r words, the Bell System is now
so large and efficient that its return on investment will rise almost auto-
matically unless held down ?Y rate redu~tions." Business Week, January
9, 1965, p. 70. For most giant corporations there is no commission to
worry about.
22
As a matter of fact, statistically recorded profits are far from
comprising the entire economic surplus. Interest and rent are also forms
of surplus; and, as we shall see, under monopoly capitalism still other
forms assume decisive importance. Up to this point, however we have
used the term "profits" to mean simply the difference bet~een sales
~·evenue. a.nd costs of production, and the aggregate of profits in this sense
IS a leg~t1mate first approximation to a ft1lly developed concept of the
economic surplus.
TllE TEl\'DENCY OF SURPLUS TO RISE 73
7
One argument against the theory that st1rplus has a tendency
to rise under monopoly capitalism could be based on Schum-
peter' s well-known notion of the ''perennial gale of creat~ve
destruction," which was originally put forward before the First
World War but only recently has found widespread favor
among the ideologists of monopoly capitalism. The argument
holds that in the long run price competition is relatively unim-
portant and that even in its absence ~onopoly profits are a
transitory phenomenon. In Schumpeter s words:
But in capitalist reality as distinct from its textbook picture, it is
not that kind of competition [price competition] that counts but the
competition from the new commodity, the new technology, the new
source of supply, the new type of organization (the largest-scale
unit of cont1·ol for instance )-competition which commands a deci-
sive cost or quality advantage and which strikes not at the margins
of the profits and the outputs of the existing firms but at their
foundations and their very lives. This kind of competition is as much
more effective than the other as a bombardment is in comparison
with forcing a door, and so much more important that it becomes a
matter of comparative indifference whether competition in the
ordinary sense functions more or less promptly; the powerful lever
that in the long run expands output and brings down prices is in any
case made of other stuff .23
There was undoubtedly something to be said for this theory
when it was first formt1lated in the early years of the twentieth
centu1·y. Emergent giant corporations what Schumpeter calls
''the largest-scale unit of control'' were in fact knocking the
foundations out from under their smaller competitors and often
expanding output and bringing down prices in the process. But
' in the highly d~eloped .mon?poly capitalism of tod,~y such
phenomena are of marginal importance. Once the largest-
scale unit of control'' has taken over, ''the new commodity, the
. new technology, the new source of supply, the new type of
organization'' all tend to be monopolized by a handful of giant
23
J. A. Schumpeter, Capitalism, Socialism, and Democracy, pp. 84-85.